Record insolvency numbers predicted

Tuesday 2 January 2007 00:02 BST

Figures are expected to reveal the number of people who went insolvent last year topped 100,000 for the first time.

Experts predicted the total number of bankruptcies and individual voluntary arrangements taken out between October and December will be roughly on a par with the previous quarter, at about the 28,000 mark.

If this proves to be the case, it will push the total for 2006 up to roughly 105,000.

This would represent a jump of 55% on the 67,580 people who went insolvent during 2005.

The announcement is likely to provoke concern that an increasing number of people are struggling to keep their heads above water amid rising debt levels and increased household costs.

It comes days after the Council of Mortgage Lenders announced a 65% hike in the number of households who saw their homes repossessed during 2006.

And despite predictions that debt levels will now level out, analysts believe 2007 could see up to 130,000 people become insolvent.

Steve Treharne, head of personal insolvency at KPMG, said: "We are expecting personal insolvencies to top 100,000 for the first time ever as financial pressures increase.

"Lending institutions in particular are concerned at these record levels. Our research shows that in 2006 IVAs resulted in the write-off of debts, by Government departments, credit providers and other business people, totalling in excess of £1.4bn."

Despite the gloomy insolvency figures, there have been some indications that attitudes towards racking up debt are beginning to change for the better, with the amount people are prepared to put on their credit card falling.